Rent Seeking in Australia: What It Means for the Economy in 2025

Rent seeking is a term that gets thrown around in economics, but its impact on the daily lives of Australians is anything but abstract. In a year marked by heated debates over housing affordability, energy policy, and big business influence, understanding rent seeking is more relevant than ever. Let’s break down what rent seeking really means, how it’s playing out in Australia in 2025, and why it matters for your money, your job, and the broader economy.

What Is Rent Seeking? Real-World Examples in 2025

At its core, rent seeking is when individuals, companies, or groups try to increase their share of existing wealth—without creating new value. Instead of innovating or producing more, rent seekers use lobbying, regulatory capture, or control over resources to secure profits. The classic example is a business lobbying the government for favorable regulations, subsidies, or tariffs that limit competition.

In 2025, Australia is seeing rent seeking in several key sectors:

• Housing: Large property developers and some lobby groups have pushed for planning restrictions that limit new housing supply, keeping prices high. While this benefits existing owners and developers, it puts upward pressure on rents and locks out first-home buyers.
• Energy: Certain energy providers have lobbied for policies that slow the rollout of renewables or maintain market power, affecting consumer prices and the pace of Australia’s energy transition.
• Mining: Resource companies often seek tax concessions or special treatment, aiming to maintain high profits even as global demand shifts.

These examples show that rent seeking isn’t just a theoretical problem—it shapes policy decisions and everyday costs.

Why Rent Seeking Matters: The Cost to the Economy

Rent seeking can have broad and lasting effects:

• Higher Prices: When competition is stifled, prices for goods and services go up. Australians have seen this in housing, electricity, and even groceries.
• Lower Innovation: Businesses focused on lobbying for advantages often invest less in new products, technology, or services.
• Inequality: Profits from rent seeking tend to flow to those with the most influence or existing wealth, widening the gap between rich and poor.

According to the Productivity Commission’s 2025 interim report, regulatory barriers and concentrated market power continue to drain billions from Australia’s potential GDP each year. For individual Australians, this translates to fewer job opportunities, stagnant wages, and higher living costs.

Policy Responses and the Road Ahead

Recognising the impact of rent seeking, policymakers in 2025 are taking steps to address it:

• Competition Reforms: The Australian Competition and Consumer Commission (ACCC) has stepped up scrutiny of mergers and anti-competitive conduct, with new powers introduced in 2024 to block deals that could entrench market power.
• Planning Reforms: State governments in NSW and Victoria have begun rolling back restrictive zoning laws to enable more housing supply, aiming to reduce the influence of property lobbyists.
• Transparency Measures: The federal government’s 2025 Integrity in Lobbying Act requires greater disclosure of political donations and lobbying activities, shining a light on the pathways of influence.

These steps are promising, but the challenge is ongoing. Rent seeking thrives in opaque systems and during times of economic uncertainty. As Australia navigates post-pandemic recovery and cost-of-living pressures, vigilance is crucial to ensure that wealth is created—not merely redistributed to the already powerful.

How Rent Seeking Affects Everyday Australians

For most Australians, the effects of rent seeking show up in subtle but significant ways:

• Renters paying more due to restricted housing supply
• Consumers facing higher energy bills as competition lags
• Small businesses struggling to compete with entrenched players who have regulatory advantages

Being aware of rent seeking and how it operates helps voters, investors, and consumers make informed choices—whether that’s supporting policy reform, choosing where to invest, or advocating for fairer markets.